& Research Article The Effect of Organizational Culture on Knowledge Management Practices and Innovation Mario J. Donate1* and Fatima �� Guadamillas2 1Faculty of Law and Social Sciences, University of Castilla-La Mancha, Cuidad Real, Spain 2Faculty of Law and Social Sciences, University of Castilla-La Mancha, Toledo, Spain In this paper we analyze the relationships between certain knowledge management (KM) practices, organizational culture, and the technological results of companies. In the last few years, KM literature has highlighted the important role of cultural values on the way KM processes are developed and applied in organizations. From this viewpoint, and focusing on a set of knowledge storage and transfer practices, we try to empirically analyze the existence of a multiplier effect of the knowledge-centered organizational culture on the relationship between these kinds of knowledge practices and the technological performance of firms. The results of the empirical study show the existence of a significant moderating effect, although the consequences on the innovative performance in terms of product or process technologies are found to be different, depending on the practice (storage or transfer) which is considered. Copyright # 2010 John Wiley & Sons, Ltd. INTRODUCTION The knowledge-based view of the firm describes companies as institutions that create, transfer, and protect knowledge in a more effective way than markets, which justify their existence and bound- aries (Conner and Prahalad, 1996 Kogut and Zander, 1992 Liebeskind, 1996). From a strategic viewpoint, it is also suggested that difference in performance between firms is owing to the heterogeneity of their knowledge bases (DeCarolis and Deeds, 1999: p. 954). Thus knowledge would be considered as the main strategic resource of organizations (Grant, 1996 Hill and Deeds, 1996 Spender and Grant, 1996). In actual fact, certain types of knowledge are scarce in general the transfer of this asset is not easy, and complex forms of knowledge are difficult to imitate and replicate (Grant, 2002: p. 177). Therefore, the management of the organizational processes which enable certain kinds of knowledge to become a source of competitive advantage for the firm is an essential task to develop (Alavi and Leidner, 2001 Grant, 1996 Spender and Grant, 1996). One of the elements which fundamentally affe- cts the capacity of firms to manage knowledge is organizational culture (Davenport et al., 1998 DeLong and Fahey, 2000). Culture can be con- sidered as an idiosyncratic asset which is accumu- lated along time and can become a source of competitive advantage if it is valuable, rare, and difficult for competitors to imitate (Barney, 1986). In addition, it constitutes an important success factor in the knowledge management (KM) process owing to its important role in establishing the firm���s strategic framework and its influence on other organizational aspects such as structure, management style, or human resources manage- ment. Promoting company culture should make KM implementation easier, thus contributing to estab- lish a shared organizational vision, commitment in terms of common projects, team work, autonomy in decision making, and a stimulus to continuous innovation (Davenport et al., 1998 Gold et al., 2001). As company culture is built up in and amongst other aspects such as values, beliefs, and company work systems, it can encourage or hinder the launching and effectiveness of KM practices related to creation, transfer or application of knowledge (see e.g., Davenport et al., 1998 Davenport and Prusak, 1998 DeLong and Fahey, 2000 Gold et al., 2001 Janz and Prasarnphanic, 2003 Leidner Knowledge and Process Management Volume 17 Number 2 pp 82���94 (2010) Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/kpm.344 *Correspondence to: Mario J. Donate, Faculty of Law and Social Sciences, University of Castilla-La Mancha, Ronda Toledo s/n, 13071, Spain. E-mail: mariojavier.donate@uclm.es Copyright # 2010 John Wiley & Sons, Ltd.

et al., 2006). Consequently, organizational change which KM processes encourage in order to face strategic changes (e.g., innovation) is affected by the existence of cultural values that could contribute to such change and adjustment (or on the contrary to make it more difficult) when the coherence among these, other organizational aspects, KM objectives and the firm���s strategy is at a maximum. In this paper we try to analyze the influence of culture on the development of certain KM practices and their joint effects on the technological perform- ance of the firm. The intended objective is twofold. On the one hand, the link between exploitation KM processes and technological results will be ana- lyzed, bearing in mind that these kinds of processes permit the firm to recover and disseminate valuable knowledge throughout the organization in order to generate value and improve organizational effec- tiveness1 (Argote and Ingram, 2000 Zack, 1999). On the other hand, the presence of a moderating effect of a knowledge-centered culture (Janz and Prasarn- phanic, 2003) on the relationship between these kinds of KM practices and technological results is studied. Although an important effort has been made over the last few years concerning the empirical analysis of the relationship between culture and KM processes (see e.g., Alavi et al. 2005 Gold et al., 2001 Janz and Prasarnphanic, 2003 Leidner et al., 2006 Schulz, 2001), there is still limited evidence on the interaction effect that is created between culture and KM practices and its impact on firm performance. Moreover, as Alavi et al. (2005: 197) argue, most of the works that analyze the relationship between culture and KM practices are focused on both knowledge transfer and creation, and thus other processes such as storage or support tools for KM have been less researched. In this sense, we try to analyze the influence of certain kinds of values on knowledge transfer and storage practices. This will provide us with a comparison between these two processes, their distinctive nature, and offer empirical evi- dence regarding their effects on the technological performance of the company. Besides exploitation KM practices or processes have a dissimilar nature than those of exploration, they also have a different effect on firm perform- ance. In addition, the effects of two often comp- lementary processes such as storage and transfer of knowledge will be analyzed, having in mind that they are also very different in nature between them in their relationship with technologies and organiz- ational culture (Davenport et al., 1998 Davenport and Prusak, 1998 Zack, 1999). Therefore in this study we will address the proposition that while an interaction effect between culture and KM practices is expected, the impact on company technological results will differ when we distinguish between the kinds of innovation to be obtained by the firm (i.e., products or processes). So, it is argued that technological product innovation needs a different focus than technological process innovation in terms of organizational prac- tices to develop among which culture is included (Zahra and Covin, 1994). The structure of the paper is as follows: first, theoretical concepts of exploitation KM pract- ices and knowledge-centered culture are exposed, highlighting works that have studied the relation- ship between these aspects secondly hypotheses, technical characteristics of the research and the empirical analysis are shown finally, we will analyze the results of the empirical analysis, and the main conclusions of the paper will be offered. KNOWLEDGE MANAGEMENT AND ORGANIZATIONAL CULTURE. BACKGROUND AND HYPOTHESIS KM practices and performance As Grant (2002: p. 176) points out, a series of events which have been produced in the two last decades2 has resulted in the appearance and consolidation of a new management perspective that includes a host of behavioral, technological, organizational, and strategic theories and contributions. In basic terms, this (KM) perspective identifies a set of processes through which knowledge is acquired, developed, gathered, shared, applied, and protected by the firm in order to improve firm performance (Alavi and Leidner, 2001). In the strategic management ambit, Grant (2002: pp. 177���178) points out two types of KM contri- butions in respect of academic and practical areas. On the one hand, there is recognition of the existence of two kinds of knowledge which count on differ- ent characteristics and organizational implications for the firm. Thus, knowledge can be explicit or tacit (Polanyi, 1966). Explicit knowledge is that which can be codified and thus incorporated into formal rules, tools, or work procedures, while tacit knowledge cannot be easily codified because it is linked to mental models, ������know-how������ and experience, and can only be transferred through activity (Nonaka and Takeu- chi, 1995). On the other hand, the management of knowledge processes which are focused on the improvement of the generation, acquisition, and exploitation of knowledge in the firm at different 1 Knowledge dissemination here refers to knowledge which is reproduced throughout the organization (e.g., best practices) and shared knowledge among individuals and groups that implies to some extent the creation of knowledge (e.g., socialization pro- cesses). 2 Among them we can point out globalization of the economy, the increasing volatility of competitive environments, a growing tendency toward knowledge intensive products and services, or the significant and rapid advances in information technologies (IT). Copyright # 2010 John Wiley & Sons, Ltd. Know. Process Mgmt. 17, 82���94 (2010) DOI: 10.1002/kpm Organizational Culture and KM Practices 83